Syndication is set to begin tomorrow for a refinancing for Panolam Industries International. The new $225 million loan will cut interest rates and pay a first time $63-70 million dividend to sponsor The Carlyle Group. The refinancing process began once an anti-trust lawsuit against manufacturers of HPL, high pressure laminates, had been settled, noted Richard Stoll, v.p. finance of the decorate laminate panel manufacturer. The dividend size will depend on cash balances at the time of closing.
"When we purchased our Pioneer Plastics subsidiary in 1999, we were aware of the lawsuit against HPL manufacturers at the time," Stoll explained. "With the settlement of that suit it brought to light that it gave us an opportunity to see if we could refinance our debt at the lower rate and at the same time, Carlyle has opted to take some capital out of the company." Carlyle, which acquired the company in November 1999, will still have over $100 million invested in the company after the dividend.
Deutsche Bank is leading the credit, which comprises a $20 million revolver, $130 million "B" loan and $75 million second-lien "C" loan. Price talk is around LIBOR plus 3 1/4% on the "B" loan, LIBOR plus 7% on the "C" and LIBOR plus 3-3 1/4% on the revolver. The company currently has $4.9 million drawn on its revolver as well as a $71.9 million "B" loan and $60 million second-lien "C" loan. The "C" loan was priced in the LIBOR plus 8-9% range, Stoll noted. Deutsche Bank officials declined comment.
"It's a good thing for us; it's a good thing for Carlyle. The company is performing better this year," Stoll noted. "This industry has been kind of down, so this year we are up and it's a nice upturn so its gives us a better opportunity to get a better debt and agreement and to help out our shareholders," he added. "We're pleased with the management team and they've done very well through a downturn in the industry and come out of it well and things are looking very bright and well positioned for the future. In that context, we think it's prudent to do a dividend at this point. The company is still very well positioned," a Carlyle spokesman said.